MiMedx Files Second Quarter 2020 Form 10-Q
Second Quarter
Results Reflects Tight Cost Containment Efforts
Company to Host Shareholder Update Call on
Highlight of Key Metrics
- Second quarter net sales of
$53.6 million , a 20.4% decrease over the second quarter of 2019 - Net loss of
$8.5 million , reflecting$11.4 million of investigation, restatement and other related expenses - Adjusted EBITDA1 of
$10.2 million , an improvement over 2019 despite lower sales volume
Quarter Ended |
Year-to-Date |
|||||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Net sales | $ | 53,647 | $ | 67,437 | $ | 115,383 | $ | 133,992 | ||||||||
Net loss | (8,466) | (17,210) | (13,287) | (30,483) | ||||||||||||
EBITDA1 | (4,172) | (14,987) | (16,133) | (26,501) | ||||||||||||
Adjusted EBITDA1 | 10,241 | 9,537 | 13,355 | 20,402 | ||||||||||||
Net loss per common share - basic | $ | (0.08) | $ | (0.16) | $ | (0.12) | $ | (0.29) | ||||||||
Net loss per common share - diluted | $ | (0.08) | $ | (0.16) | $ | (0.12) | $ | (0.29) |
- EBITDA and Adjusted EBITDA are non-GAAP financial measures. See “Reconciliation of GAAP Net Income to EBITDA and Adjusted EBITDA” for a reconciliation of EBITDA and Adjusted EBITDA to Net loss, located in “Selected Unaudited Financial Information” of this release.
Net sales for the quarter ended
Selling, General and Administrative (SG&A) expenses for the second quarter of 2020 decreased
Investigation, restatement and related expenses for the second quarter of 2020 were
Research and development expenses were
COVID-19 Update
The ongoing COVID-19 pandemic has impacted the Company’s ability to sell products and access various sites of care across the country as patients stayed away from hospitals and other medical facilities. This had an adverse effect on our revenues beginning late in the first quarter of 2020 and continuing into April. By mid-May, access restrictions to hospitals and offices of healthcare providers had eased for the Company’s sales force, and significant numbers of patients began to return for treatment, including for elective procedures. On an “as shipped” basis, net sales in
Beginning in early
Recent Developments
On
On
Shareholder Webcast
U.S. Investors: 1-877-407-4018
Conference ID: 13707734
Webcast: http://public.viavid.com/index.php?id=141037
A replay of the webcast will be available for approximately thirty days on the Company’s website at www.mimedx.com following the conclusion of the webcast.
Important Cautionary Statement
This press release contains forward-looking statements. All statements relating to events or results that may occur in the future are forward-looking statements, including, without limitation, statements regarding expected research and development expenses and the anticipated effects of the COVID-19 pandemic. Forward-looking statements generally can be identified by words such as “expect,” “will,” “intend,” “seek,” “target,” “future,” “plan,” “continue,” “potential,” “possible,” “could,” “would,” “may,” “anticipate,” “to be” and similar expressions. These statements are based on numerous assumptions and involve known and unknown risks, uncertainties and other factors that could significantly affect the Company’s operations and may cause the Company’s actual actions, results, financial condition, performance or achievements to differ materially from any future actions, results, financial condition, performance or achievements expressed or implied by any such forward-looking statements. Factors that may cause such a difference include, without limitation, those discussed under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended
Unless required by law, the Company does not intend, and undertakes no obligation, to update or publicly release any revision to any forward-looking statements, whether as a result of the receipt of new information, the occurrence of subsequent events, a change in circumstances or otherwise. Each forward-looking statement contained in this release is specifically qualified in its entirety by the aforementioned factors. Readers are advised to carefully read this release in conjunction with the important disclaimers set forth above prior to reaching any conclusions or making any investment decisions and not to place undue reliance on forward-looking statements, which apply only as of the date of this release.
About
MiMedx® is an industry leader in advanced wound care and an emerging therapeutic biologics company developing and distributing human placental tissue allografts with patent-protected processes for multiple sectors of healthcare. The Company processes the human placental tissue utilizing its proprietary PURION® process methodology, among other processes, to produce allografts by employing aseptic processing techniques in addition to terminal sterilization.
Contacts:
Investor Relations & Corporate Communications
770.651.9066
investorrelations@mimedx.com
Selected Unaudited Financial Information
Condensed Consolidated Balance Sheets |
||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||
2020 |
2019 |
|||||||||||||||||||||
ASSETS | ||||||||||||||||||||||
Current assets: | ||||||||||||||||||||||
Cash and cash equivalents | $ | 48,189 | $ | 69,069 | ||||||||||||||||||
Accounts receivable, net | 30,097 | 32,327 | ||||||||||||||||||||
Inventory, net | 10,565 | 9,104 | ||||||||||||||||||||
Prepaid expenses | 2,850 | 6,669 | ||||||||||||||||||||
Income tax receivable | 10,700 | 18 | ||||||||||||||||||||
Other current assets | 5,191 | 6,058 | ||||||||||||||||||||
Total current assets | 107,592 | 123,245 | ||||||||||||||||||||
Property and equipment, net | 10,820 | 12,328 | ||||||||||||||||||||
Right of use asset | 2,911 | 3,397 | ||||||||||||||||||||
19,976 | 19,976 | |||||||||||||||||||||
Intangible assets, net | 7,386 | 7,777 | ||||||||||||||||||||
Other assets | 2,227 | 443 | ||||||||||||||||||||
Total assets | $ | 150,912 | $ | 167,166 | ||||||||||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||||
Accounts payable | $ | 11,946 | $ | 8,710 | ||||||||||||||||||
Accrued compensation | 20,784 | 21,302 | ||||||||||||||||||||
Accrued expenses | 25,768 | 32,161 | ||||||||||||||||||||
Current portion of long-term debt | 3,750 | 3,750 | ||||||||||||||||||||
Other current liabilities | 1,415 | 1,399 | ||||||||||||||||||||
Total current liabilities | 63,663 | 67,322 | ||||||||||||||||||||
Long-term debt, net | 61,472 | 61,906 | ||||||||||||||||||||
Other liabilities | 2,917 | 3,540 | ||||||||||||||||||||
Total liabilities | 128,052 | 132,768 | ||||||||||||||||||||
Stockholders’ equity | ||||||||||||||||||||||
Preferred stock | — | — | ||||||||||||||||||||
Common stock | 113 | 113 | ||||||||||||||||||||
Additional paid-in capital | 151,625 | 147,231 | ||||||||||||||||||||
(13,451) | (10,806) | |||||||||||||||||||||
Accumulated deficit | (115,427) | (102,140) | ||||||||||||||||||||
Total stockholders' equity | 22,860 | 34,398 | ||||||||||||||||||||
Total liabilities and stockholders' equity | $ | 150,912 | $ | 167,166 | ||||||||||||||||||
Condensed Consolidated Statements of Operations |
||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Three Months Ended |
Six Months Ended |
|||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||
Net sales | $ | 53,647 | $ | 67,437 | $ | 115,383 | $ | 133,992 | ||||||||||||||||
Cost of sales | 8,198 | 9,749 | 18,223 | 17,167 | ||||||||||||||||||||
Gross profit | 45,449 | 57,688 | 97,160 | 116,825 | ||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||
Selling, general and administrative | 37,329 | 50,641 | 84,270 | 101,503 | ||||||||||||||||||||
Investigation, restatement and related | 11,446 | 21,025 | 27,038 | 39,132 | ||||||||||||||||||||
Research and development | 2,259 | 2,828 | 4,910 | 5,730 | ||||||||||||||||||||
Amortization of intangible assets | 271 | 267 | 542 | 500 | ||||||||||||||||||||
Impairment of intangible assets | — | — | — | 446 | ||||||||||||||||||||
Operating loss | (5,856) | (17,073) | (19,600) | (30,486) | ||||||||||||||||||||
Other income (expense) | ||||||||||||||||||||||||
Interest expense, net | (2,574) | (269) | (4,961) | (58) | ||||||||||||||||||||
Other (expense) income, net | (9) | 174 | (3) | 145 | ||||||||||||||||||||
Loss before income tax provision | (8,439) | (17,168) | (24,564) | (30,399) | ||||||||||||||||||||
Income tax provision (expense) benefit | (27) | (42) | 11,277 | (84) | ||||||||||||||||||||
Net loss | $ | (8,466) | $ | (17,210) | $ | (13,287) | $ | (30,483) |
Condensed Consolidated Statements of Cash Flows |
|||||||
(Unaudited) | |||||||
(in thousands) | |||||||
Six Months Ended |
|||||||
2020 | 2019 | ||||||
Cash flows from operating activities | |||||||
Net loss | $ | (13,287) | $ | (30,483) | |||
Adjustments to reconcile net loss to net cash flows used in operating activities | |||||||
Share-based compensation | 7,783 | 6,513 | |||||
Depreciation | 2,928 | 3,340 | |||||
Amortization of intangible assets | 542 | 500 | |||||
Amortization of deferred financing costs | 1,441 | 116 | |||||
Bad debt expense | 234 | — | |||||
Non-cash lease expenses | 486 | 492 | |||||
Reserve for inventory obsolescence | (217) | 500 | |||||
Loss on fixed asset disposal | 1 | 313 | |||||
Impairment of intangible assets | — | 1,258 | |||||
Increase (decrease) in cash resulting from changes in: | |||||||
Accounts receivable | 1,996 | — | |||||
Inventory | (1,243) | 534 | |||||
Prepaid expenses | 3,819 | 4,125 | |||||
Income tax receivable | (10,682) | (80) | |||||
Other current assets | 821 | (1,527) | |||||
Accounts payable | 3,236 | (4,072) | |||||
Accrued compensation | (518) | (3,814) | |||||
Accrued expenses | (12,109) | 10,975 | |||||
Other liabilities | (609) | (1,820) | |||||
Net cash flows used in operating activities | (15,378) | (13,130) | |||||
Cash flows from investing activities: | |||||||
Purchases of equipment | (1,421) | (899) | |||||
Principal payments from note receivable | — | 389 | |||||
Patent application costs | (151) | (253) | |||||
Net cash flows used in investing activities | (1,572) | (763) | |||||
Cash flows from financing activities: | |||||||
Proceeds from term loan | 10,000 | 72,750 | |||||
Repayment of term loan | (11,875) | — | |||||
Deferred financing cost | (23) | (6,045) | |||||
Stock repurchased for tax withholdings on vesting of restricted stock | (2,330) | (1,109) | |||||
Proceeds from exercise of stock options | 298 | 108 | |||||
Net cash flows (used in) provided by financing activities | (3,930) | 65,704 | |||||
Net change in cash | (20,880) | 51,811 | |||||
Cash and cash equivalents, beginning of period | 69,069 | 45,118 | |||||
Cash and cash equivalents, end of period | $ | 48,189 | $ | 96,929 |
Reconciliation of GAAP Net Income to EBITDA and Adjusted EBITDA
In addition to our GAAP results, we provide certain non-GAAP metrics including Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) and Adjusted EBITDA. We believe that the presentation of these measures provides important supplemental information to management and investors regarding our performance. These measurements are not a substitute for GAAP measurements. Company management uses these Non-GAAP measurements as aids in monitoring our ongoing financial performance from quarter-to-quarter and year-to-year on a regular basis and for benchmarking against comparable companies. EBITDA is intended to provide a measure of the Company’s operating performance as it eliminates the effects of financing and capital expenditures. EBITDA consists of GAAP net loss excluding: (i) depreciation, (ii) amortization of intangibles, (iii) interest expense and (iv) income tax provision (benefit). Adjusted EBITDA is intended to provide a normalized view of EBITDA and our broader business operations that we expect to experience on an ongoing basis by removing items that may be irregular, one-time, or non-recurring from EBITDA; most significantly those expenses related to the Audit Committee investigation and restatement. This enables us to identify underlying trends in our business that could otherwise be masked by such items. Adjusted EBITDA consists of GAAP net loss excluding: (i) depreciation, (ii) amortization of intangibles, (iii) interest expense, (iv) income tax provision (benefit), (v) costs incurred in connection with the Audit Committee investigation and restatement, (vi) the effect of the Company’s change in revenue recognition pattern, (vii) impairment of intangible assets and (viii) share-based compensation. A reconciliation of GAAP Net Loss to EBITDA and Adjusted EBITDA appears in the table below (in thousands).
Three Months Ended |
Six Months Ended |
||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Net loss | $ | (8,466) | $ | (17,210) | $ | (13,287) | $ | (30,483) | |||||||
Net margin | (15.8%) | (25.5%) | (11.5%) | (22.7%) | |||||||||||
Non-GAAP Adjustments: | |||||||||||||||
Depreciation expense | 1,422 | 1,645 | 2,928 | 3,340 | |||||||||||
Amortization of intangible assets | 271 | 267 | 542 | 500 | |||||||||||
Interest expense, net | 2,574 | 269 | 4,961 | 58 | |||||||||||
Income tax provision expense (benefit) | 27 | 42 | (11,277 | ) | 84 | ||||||||||
EBITDA | $ | (4,172) | $ | (14,987) | $ | (16,133) | $ | (26,501) | |||||||
EBITDA margin | (7.8%) | (22.2%) | (14.0%) | (19.8%) | |||||||||||
Additional Non-GAAP Adjustments | |||||||||||||||
Costs incurred in connection with the Audit Committee investigation and restatement |
11,446 | 21,025 | 27,038 | 39,132 | |||||||||||
Effect of change in revenue recognition | (1,467 | ) | — | (5,333 | ) | — | |||||||||
Impairment of intangible assets | — | — | — | 1,258 | |||||||||||
Share-based compensation | 4,314 | 3,499 | 7,783 | 6,513 | |||||||||||
Adjusted EBITDA | $ | 10,121 | $ | 9,537 | $ | 13,355 | $ | 20,402 | |||||||
Adjusted EBITDA margin | 19.1% | 14.1% | 11.6% | 15.2% |
Source: MiMedx Group, Inc.